Traber v. Bank of Am.

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance with
the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA14-1028

Filed: 4 August 2015

Polk County, No. 13 CVS 129

LAWRENCE J. TRABER and ELGE L. TRABER, Plaintiffs,

v.

BANK OF AMERICA and BANK OF AMERICA HOME LOANS, Defendants.

Appeal by plaintiffs from order entered 9 July 2014 by Judge Marvin P. Pope

in Polk County Superior Court. Heard in the Court of Appeals 22 January 2015.

Lawrence J. Traber and Elge L. Traber, pro se, plaintiffs-appellants.

McGuireWoods, LLP, by R. Locke Beatty, for defendants-appellees.

GEER, Judge.

Plaintiffs Lawrence J. Traber and Elge L. Traber appeal from an order

granting judgment on the pleadings pursuant to Rule 12(c) of the Rules of Civil

Procedure and from an order denying their motion for rehearing pursuant to Rule 59

of the Rules of Civil Procedure. Because the trial court considered exhibits in addition

to the pleadings, the motion filed by defendants Bank of America (“BANA”) and Bank

of America Home Loans (“BAHL”) was converted into a motion for summary

judgment. We agree with defendants that the trial court properly entered judgment

on plaintiffs’ claims based on the doctrine of res judicata. Plaintiffs’ claims in this
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Opinion of the Court

case allege violations of the federal Home Affordable Modification Program (“HAMP”)

rules. However, plaintiffs had, in a prior lawsuit, similarly alleged that defendants

committed HAMP violations, and those claims were dismissed with prejudice. We

hold that res judicata applies, and the trial court properly entered judgment

dismissing this action.

Facts

In 2006, plaintiffs took out a $417,000.00 mortgage with Mid-Atlantic

Financial Services, Inc. that was secured by property at 3521 Howard Gap Road in

Saluda, North Carolina. Plaintiffs stopped making payments on their mortgage in

2009 and received a letter of default from BANA. On 17 December 2010, plaintiffs

filed a complaint (“the 2010 complaint”) in Polk County Superior Court, alleging

claims against the following defendants: Bank of America Corporation Home Loans

Servicing LP, BANA, BAC/Countrywide Home Loans (“BACHLS”), Mortgage

Electronic Registration Services (“MERS”), and Fannie Mae.

In the 2010 complaint as amended, plaintiffs made the following allegations.

Plaintiffs asserted that they signed the loan documents in 2006 under duress, and

sometime thereafter the defendants denied plaintiffs a rescission of their loan.

According to the complaint, the defendants did not properly register the mortgage in

accordance with federal laws and also did not pay real property transfer taxes on the

property. Plaintiffs acknowledged that they stopped making payments on their

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Opinion of the Court

mortgage after 3 August 2009 and that they received a letter from the defendants

notifying them of their default under the terms of the mortgage. Plaintiffs claimed

that they assumed from the default letter that foreclosure was impending. After

receiving the default letter, plaintiffs “submitted at least four loan modification

packages with no satisfaction (a violation of HAMP guidelines).” They alleged further

that they requested, but never received, documentation regarding the ownership of

their mortgage from the defendants. The complaint asserted that plaintiffs filed the

2010 complaint because of the HAMP violations and the refusal to provide them with

the requested documentation. The complaint also alleged violations of other federal

and state law.

Finally, plaintiffs claimed that the defendants had presented no evidence of

ownership of the loan and, therefore, had no standing to foreclose on the property.

Based on that allegation, plaintiffs asserted a claim to quiet title and requested that

the trial court prohibit the defendants from demanding mortgage payments from

plaintiffs.

The defendants named in the 2010 complaint filed a motion to dismiss. At the

hearing on the motion to dismiss, counsel for the defendants pointed out that

plaintiffs were not actually in foreclosure and that any claim for alleged HAMP

violations should, therefore, be dismissed. On 18 April 2011, the trial court ordered

that “Defendants’ Motion to Dismiss is GRANTED as to Plaintiffs’ Complaint and

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Opinion of the Court

Amended Complaint and that this action is hereby DISMISSED pursuant to Rule

12(b)(6).”

On 23 May 2011, plaintiffs filed a second lawsuit, although this time in federal

court (“the 2011 complaint”). The 2011 complaint again included BACHLS as a

defendant, as well as other defendants. In that complaint, plaintiffs asserted causes

of action against the defendants based on their allegations that plaintiffs had “made

numerous inquiries [to the defendants] but were stonewalled when they asked who

now owned the[ir] note.” Plaintiffs alleged, based on this behavior, that the holder of

their mortgage had “bifurcated the loan by retaining the security interest while the

note was sold, and . . . caused the mortgage to become unsecured.” Plaintiffs sought

a declaration that their note had become unsecured “because it was bifurcated.”

In order to establish diversity jurisdiction, plaintiffs amended their complaint

to drop their claims against BACHLS. Ultimately, the federal district court

dismissed the lawsuit as barred by res judicata. Traber v. Mortg. Elec. Registration

Sys., Inc., 2012 WL 4089282, 2012 U.S. Dist. LEXIS 131907 (W.D.N.C., Sept. 17,

2012), aff’d, 510 Fed. Appx. 307 (4th Cir.), cert. denied, ___ U.S. ___, 187 L. Ed. 2d

366, 134 S. Ct. 518 (2013).

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Opinion of the Court

On 23 May 2013, plaintiffs filed suit again in Polk County Superior Court (“the

2013 complaint”) against BANA and BAHL.1 Plaintiffs alleged that when they

applied for a HAMP home loan modification in 2009, pursuant to 12 U.S.C. § 1701

(c)(5), defendants placed them on a “merry-go-round in which [plaintiffs] repeatedly

provided documentation to Bank of America and were told that their submission had

not been received, or that forms were wrong or incomplete, and making them wait

months for a response only to be told that because of the delay, the window for them

to apply for a HAMP modification had closed, and finally that they were ineligible for

a HAMP loan modified [sic] because they were not ‘actually in foreclosure.’ ” Plaintiffs

alleged that this drawn out process led to the denial of their loan modification

application and that, but for defendants’ actions, they would be entitled to receive a

HAMP loan modification. Plaintiffs further alleged that defendants’ actions were

part of a broader scheme to engage in HAMP violations for a profit. Based on

defendants’ alleged HAMP violations, plaintiffs asserted claims for “Breach of

Warranty of Good Faith,” “Failure to Comply with 12 USC 1701,” fraud, and

conversion.

In support of their contention that they were wrongly denied a loan

modification package due to defendants’ HAMP violations, plaintiffs alleged they

1Plaintiffs have named BAHL as a defendant in this action, although this entity does not
appear to actually exist. To the extent plaintiffs intended to name BACHLS as a party, BANA asserts
that BACHLS merged with BANA prior to the filing of the 2013 complaint.

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Opinion of the Court

received a check from a company called Rust Consulting, Inc. (“Rust Consulting

check”) that was accompanied by a letter informing them that they were part of a

class of homeowners who were being compensated as part of a settlement between

BANA and multiple state attorneys general over BANA’s alleged “ ‘deficient mortgage

servicing and foreclosure process.’ ” Plaintiffs also referred to a whistleblower lawsuit

brought by a former BANA employee, Gregory Mackler, United States ex rel. Gregory

Mackler v. Bank of Am., N.A. & BAC Home Loan Servicing, L.P., No. 1:11-CV-11-

3270 (E.D.N.Y., June 1, 2012), alleging that BANA committed HAMP violations.

Plaintiffs noted that this lawsuit ultimately settled. Although plaintiffs did not make

the Mackler complaint part of the record, they asserted that the complaint contained

allegations that BANA violated HAMP guidelines by subjecting mortgage customers

to tactics similar to those that plaintiffs contend caused them to be denied a HAMP

loan modification.

BANA gave notice of removal to federal court. Plaintiffs moved to remand the

case back to Polk County Superior Court. On 7 March 2014, the district court entered

an order dismissing plaintiffs’ claim of “Failure to Comply with 12 USC 1701,”

declining to exercise jurisdiction over the remaining state law claims, and remanding

the 2013 action to state court.

On or about 3 April 2014, BANA filed an answer and affirmative defenses.

BANA also filed a motion for judgment on the pleadings pursuant to Rule 12(c) of the

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Opinion of the Court

Rules of Civil Procedure, arguing that the 2013 complaint was “barred by the doctrine

of res judicata” and that plaintiffs had failed to state a claim for relief. BANA filed a

memorandum in support of this motion, to which was attached several exhibits,

including copies of plaintiffs’ deed of trust, the 2010 complaint, the order dismissing

the 2010 complaint, the amended 2011 complaint, the order dismissing the 2011

complaint, and the Fourth Circuit’s decision affirming that dismissal.

On 25 April 2014, plaintiffs sought a 30-day extension of their time to answer

the motion for judgment on the pleadings. On or about 3 May 2014, the trial court

denied plaintiffs’ motion and granted BANA’s motion for judgment on the pleadings,

dismissing plaintiffs’ 2013 complaint “in its entirety with prejudice.” On 9 May 2014,

plaintiffs filed a motion for reconsideration of the dismissal of the 2013 complaint

pursuant to Rule 59(a)(1), (3), and (8) of the Rules of Civil Procedure. The trial court

denied the Rule 59 motion on 9 July 2014.

Plaintiffs gave timely notice of appeal from the order denying reconsideration

on 10 July 2014. On 15 July 2014, plaintiffs amended their notice of appeal to also

timely appeal the order entering judgment dismissing the 2013 complaint.

Discussion

Plaintiffs first argue that the trial court should not have granted defendants’

motion for judgment on the pleadings regarding the 2013 complaint because the

alleged HAMP violations in the 2013 complaint were not barred by the doctrine of res

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Opinion of the Court

judicata. We note that after BANA submitted its memorandum in support of its Rule

12(c) motion with attached exhibits, plaintiffs did not object to consideration of the

exhibits. Thus, “matters outside the pleadings [were] received and not excluded by

the trial court,” and therefore the “motion for judgment on the pleadings should be

treated as a motion for summary judgment and disposed of in the manner and under

the conditions set forth in Rule 56 of the North Carolina Rules of Civil Procedure.”

Helms v. Holland, 124 N.C. App. 629, 633, 478 S.E.2d 513, 516 (1996) (holding that

motion for judgment on pleadings under Rule 12(c) had been converted to motion for

summary judgment because trial court considered materials outside pleadings).

“Our standard of review of an appeal from summary judgment is de novo; such

judgment is appropriate only when the record shows that ‘there is no genuine issue

as to any material fact and that any party is entitled to a judgment as a matter of

law.’ ” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting

Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007)). Summary judgment

is appropriate

when the pleadings, together with depositions,
interrogatories, admissions on file, and supporting
affidavits show that there is no genuine issue as to any
material fact and that a party is entitled to judgment as a
matter of law.

Stafford v. Cnty. of Bladen, 163 N.C. App. 149, 151, 592 S.E.2d 711, 713 (2004).

This Court has explained with respect to the doctrine of res judicata:

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Opinion of the Court

The party seeking to assert res judicata has the burden of
establishing its elements. A party must show (1) a final
judgment on the merits in an earlier suit, (2) an identity of
the causes of action in both the earlier and the later suit,
and (3) an identity of the parties or their privies in the two
suits in order to prevail on a theory of res judicata.

Auto. Grp., LLC v. A-1 Auto Charlotte, LLC, ___ N.C. App. ___, ___, 750 S.E.2d 562,

565 (2013) (internal citations and quotation marks omitted).

There is no dispute that the first and third elements of the res judicata doctrine

have been satisfied. Plaintiffs, however, dispute whether there is an identity in

causes of action between the 2010 and 2013 complaints. Res judicata bars “ ‘matters

actually litigated and determined, [or] matters which could properly have been

litigated and determined in the former action. . . .’ ” Moody v. Able Outdoor, Inc., 169

N.C. App. 80, 87, 609 S.E.2d 259, 263 (2005) (quoting Fickley v. Greystone Enters.,

140 N.C. App. 258, 260, 536 S.E.2d 331, 333 (2000)). Where, in a subsequent action,

a party “attempt[s] to proceed by asserting a new legal theory or by seeking a different

remedy” than in a prior action, yet does not “seek[] a remedy for a separate and

distinct . . . act leading to a separate and distinct injury[,]” then the subsequent action

is barred by res judicata. Bockweg v. Anderson, 333 N.C. 486, 494, 428 S.E.2d 157,

163 (1993).

Because plaintiffs alleged precisely the same HAMP violations in the 2010

complaint as they did in the 2013 complaint and that they suffered the same injury

(that they were denied a HAMP loan modification package as a result of the alleged

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Opinion of the Court

violations), we hold that defendants have met their burden of showing that the claims

asserted in the 2013 complaint are barred by res judicata. See In re Raynor, ___ N.C.

App. ___, ___, 748 S.E.2d 579, 584 (2013) (holding homeowners estopped from raising

issue of HAMP violations as defense against bank in foreclosure proceeding when

homeowners’ separate suit against bank asserting HAMP violations was previously

dismissed with prejudice).

Plaintiffs nonetheless cite Gaither Corp. v. Skinner, 241 N.C. 532, 536, 85

S.E.2d 909, 912 (1955), for the proposition that “where the omission of an item from

a single cause of action is caused by fraud or deception of the opposing party, or where

the owner of the cause of action had no knowledge or means of knowledge of the item,

the judgment in the first action does not ordinarily bar a subsequent action for the

omitted item.” Plaintiffs do not, however, argue that they were fraudulently misled

or deceived as to the existence of the alleged HAMP violations. Instead, plaintiffs

merely assert that they lacked knowledge of the Mackler complaint and settlement,

as well as the Rust Consulting check, which provided evidence in support of their

eligibility for a HAMP modification and defendants’ alleged HAMP violations.

In contrast to Gaither, plaintiffs do not contend they were unaware of any

claim, but rather that Mackler and the Rust Consulting check provided evidence in

support of their existing claims of which they were unaware at the time of the 2010

complaint. The uncovering of additional evidence is not sufficient to avoid the res

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Opinion of the Court

judicata doctrine. See Scarvey v. First Fed. Sav. & Loan Ass’n of Charlotte, 146 N.C.

App. 33, 40, 552 S.E.2d 655, 659 (2001) (holding appellants could not avoid collateral

estoppel bar by asserting “additional evidence about the original facts”).

Plaintiffs further argue that in the 2013 complaint, they pled a claim not

previously asserted for violation of the duty of good faith and fair dealing. In addition,

they argue that their allegations amounted to a claim for unfair or deceptive trade

practices in violation of N.C. Gen. Stat. § 75-1.1 (2013), even though the complaint

did not specifically assert such a claim. Because, however, these claims are still based

on the HAMP violations that were the subject of the 2010 complaint and amount to a

“mere[] change [in] legal theory” with respect to the same injury that was the subject

of the 2010 complaint, these claims are likewise barred by res judicata. Bockweg, 333

N.C. at 494, 428 S.E.2d at 163.

Additionally, for the first time in their reply brief, plaintiffs contend First Fed.

Bank v. Aldridge, ___ N.C. App. ___, 749 S.E.2d 289 (2013), supports their contention

that defendants failed to properly demonstrate ownership of their mortgage. Since

plaintiffs raised the issue of the ownership of their mortgage in the 2010 complaint,

their arguments based on First Federal Bank are also barred by res judicata.

Consequently, we hold that the trial court did not err in granting judgment in favor

of defendants. See Stafford, 163 N.C. App. at 155, 592 S.E.2d at 715 (affirming grant

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Opinion of the Court

of summary judgment in favor of defendant because plaintiffs’ claims barred by res

judicata).

Finally, plaintiffs argue that the trial court erred in denying their motion for

reconsideration made pursuant to Rule 59(a)(1), (3), and (8) of the Rules of Civil

Procedure. “ ‘[W]here [a] [Rule 59] motion involves a question of law or legal

inference, our standard of review is de novo.’ ” Bodie Island Beach Club Ass’n v. Wray,

215 N.C. App. 283, 294, 716 S.E.2d 67, 77 (2011) (quoting Batlle v. Sabates, 198 N.C.

App. 407, 423, 681 S.E.2d 788, 799 (2009)). Because we have determined that the

trial court did not err in dismissing the 2013 complaint based on res judicata, the

trial court likewise did not err in denying plaintiffs’ Rule 59 motion.

AFFIRMED.

Judges STEPHENS and DILLON concur.

Report per Rule 30(e).

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